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Non-Disclosure Agreement

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An NDA, or non-disclosure agreement, is a contract obligating a party to not disclose confidential information. NDAs are used in many business situations where sensitive information is involved.

For example, a company might have their employees or contractors sign an NDA to ensure they don’t disclose company secrets to competitors. Or two parties might be exploring a business deal together and want to ensure their discussions and anything they share about themselves remains private.

An NDA creates a legal obligation for the other party to keep your confidential information private and imposes legal consequences if they violate its terms.

NDAs contain a few common features. An NDA should clearly indicate who is obligated to keep the information confidential. The NDA should also define what exactly constitutes confidential information. For example, the NDA may specifically name what is being protected (i.e., a specific document or file) or may more broadly describe confidential information as anything proprietary to one party.

NDAs usually also contain carve-outs for things not considered confidential information. For example, information that the recipient already had is usually exempted from confidentiality obligations.

NDAs also usually have a defined term, i.e., the period of time the confidentiality obligations will remain in effect. NDAs will also outline the consequences for breaching the NDA. Oftentimes NDAs give the aggrieved party the right to pursue an injunction and damages for breach.

The length of an NDA is a negotiated point between the parties. Typically, NDAs last anywhere from a year to two years. The exact term of an NDA however is highly dependent on the particular circumstances involved and is sometimes a contentious point of negotiation.

The disclosing party will want the longest amount of time possible whereas the recipient will usually try to limit the time they are obligated to maintain confidentiality.